Retail Business Intelligence: Using Data for Better Decision Making

In retail like any other industry there are multitude of interacting business processes. Every business process has input and output data. Output data of one business process can be input data for another and vice versa. Hence theres a multitude of data and making sense of these data becomes a "haystack" problem. Most retailers analyze few of the important data of few important business processes to help them make better business decisions. However it might just happen that some key data might be ignored just due to the absence of arranged and prioritized data. Also it might just happen that the retailer is tracking a wrong KPI altogether due to an myopic approach of selection of data. To add to the problem retailers have disparate systems for different business processes. Collecting data from all these disparate systems and making sense out it is a difficult job.
The idea is that retailers should be focused on a very select data and select KPIs; but the most critical and correct ones. Hence the question to be asked is how does one know what are the correct and critical KPIs and data?
Retail business intelligence is a process of defining data and KPIs to enable retailers better streamline their decision making using data.
Retail business intelligence has two components the metadata and the KPI. Metadata gives definition and logical meaning to the data while KPI gives business meaning to the data. Data from all the disparate systems are pooled in a central location such as a data warehouse. Here the data is associated to metadata to arrange logically segregate and arrange them.
Next KPIs across business processes are defined. For example KPIs for distribution, logistic, category management etc are all defined in a centralized location. These KPIs then use the pooled data to derive a value of business importance.
The KPIs are also arranged based on the viewing authority. For example a Inventory Planning Head would be interested in KPIs such as DC inventory vs Sales, Target Inventory vs Actual Inventory etc while a Store Manager will be viewing KPIs such as Store Floor Space Utilization, Employee Utilization etc. Hence restricting user/ viewer based viewing of data helps the users to focus on their respective KPIs.
Centrally managing data and KPI helps retailers better maintain data and quickly derive sense out of it and hence in turn drive agility in better decision making.

Indian Retail Formats: Strategy to Capture Market Share

Organized retail in India is a new but rapidly growing concept. The top businesses of India are now trying to get a share of the highly lucrative business of organized retailing. Competition is fierce and is between the small retail chains vs the big business houses as new entrants to the retail industry and that between the whole of organized retailers vs the independent traders/ retail shop owners. The competition at this stage (start of life cycle) for organized retailing in India is for Market Share. Each retailer wants to maximize its market share.
In order to grow market share retailers are looking at different strategies to do so. The strategy for the store format is one of the most crucial strategy decision.
Before we try to understand the store format strategy let us first note the few of the uniqueness of India around organized retailing:
1. India has stark differences between cities, towns and villages. The retail needs of cities , towns and villages in India are very different and has unique characteristics.
2. India is a multi cultural country. Each culture has its own retail needs.
3. As with the rest of the world in India too there is a growing market for niche retail needs.

Retailers need to consider the above three factors while defining the store format strategy. The retailer can choose the format for a store depending on the market(demography, age group etc) the store will cater to. The retailer may focus on one specific "niche" market or may want to cater to diverse "general" and "niche" market. Hence different formats of store is required to cater to different target market. The known formats are Supermarket, Hypermarket, Cash n Carry, Speciality, Malls etc. The question to be asked for an Indian retailer is What store format will help the retailer maximize market share? Given the nascent stage of Indian retailing no one format looks like a clear winner. And hence that's the reason that most retailers are trying different store formats to capture market share. For example , Future Group is trying to increase market share by trying various store formats such as Hypermarket (BigBazaar), Supermarket (FoodBazaar), Malls (Central), Fashion (Pantaloons). Similarly , Subhiksha group has Subhiksha General Stores (General Stores) and Sukhiksha Mobile Stores (Speciality). Hence every retailer is trying and studying the various formats of stores to capture market share. No one format is clearly evolving as a clear winner.

Though it might be too early to predict the winner format let us first consider the following factors such as;
1. Indians are cost conscious
2. Indians would prefer a one stop shop for eatables; vegetables, fruits, fish and meat etc.
3. Indians prefer speciality retail outlets for fashion shopping such as furnitures, apparels and electronics
goods

Based on these facts one can predict the need for general store like a neighbourhood food store for daily needs such as vegetables, cereals etc. The stores can have a sq footage area of approx 2500-3000. Theses stores are convenient stores for being easily accessibility and discounts.
For fashion merchandise the stores can be speciality stores. These stores will be speciality retailers for a single kind of merchandise such as apparels or furniture etc. Existing speciality retail outlets such as Mobile Store might not succeed and rather the mobile section in a electronics speciality stores such as E Zone etc.